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Hedge Funds Never Been Less Bullish On Sinclair Broadcast Group, Inc. (SBGI)

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While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Sinclair Broadcast Group, Inc. (NASDAQ:SBGI).

Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) has experienced a decrease in activity from the world's largest hedge funds of late. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) was in 19 hedge funds' portfolios at the end of March. The all time high for this statistic is 47. Our calculations also showed that SBGI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In today’s marketplace there are plenty of signals market participants put to use to grade their holdings. Some of the most underrated signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the market by a very impressive amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Best Magic Formula Investing Stocks To Buy Now
Best Magic Formula Investing Stocks To Buy Now

Joel Greenblatt of Gotham Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's analyze the fresh hedge fund action surrounding Sinclair Broadcast Group, Inc. (NASDAQ:SBGI).

Do Hedge Funds Think SBGI Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -34% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SBGI over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is SBGI A Good Stock To Buy?
Is SBGI A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, HG Vora Capital Management, managed by Parag Vora, holds the largest position in Sinclair Broadcast Group, Inc. (NASDAQ:SBGI). HG Vora Capital Management has a $139 million position in the stock, comprising 7.4% of its 13F portfolio. The second most bullish fund manager is Stephen Mildenhall of Contrarius Investment Management, with a $107.5 million position; 6.1% of its 13F portfolio is allocated to the stock. Other peers with similar optimism comprise Mario Gabelli's GAMCO Investors, D. E. Shaw's D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position HG Vora Capital Management allocated the biggest weight to Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), around 7.42% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, setting aside 6.08 percent of its 13F equity portfolio to SBGI.

Because Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) has experienced declining sentiment from the smart money, logic holds that there is a sect of fund managers who were dropping their positions entirely by the end of the first quarter. Intriguingly, David Rosen's Rubric Capital Management dumped the largest investment of all the hedgies followed by Insider Monkey, valued at an estimated $32 million in stock, and Randall Smith's Alden Global Capital was right behind this move, as the fund said goodbye to about $20.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 10 funds by the end of the first quarter.

Let's go over hedge fund activity in other stocks similar to Sinclair Broadcast Group, Inc. (NASDAQ:SBGI). We will take a look at WW International, Inc. (NASDAQ:WW), ON24, Inc. (NYSE:ONTF), Piedmont Office Realty Trust, Inc. (NYSE:PDM), Vector Group Ltd (NYSE:VGR), Edgewell Personal Care Company (NYSE:EPC), Velodyne Lidar, Inc. (NASDAQ:VLDR), and FinVolution Group (NYSE:FINV). All of these stocks' market caps resemble SBGI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WW,28,466061,-4 ONTF,19,117781,19 PDM,13,81180,2 VGR,14,150484,0 EPC,20,235053,0 VLDR,15,43509,-1 FINV,11,14660,3 Average,17.1,158390,2.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $396 million in SBGI's case. WW International, Inc. (NASDAQ:WW) is the most popular stock in this table. On the other hand FinVolution Group (NYSE:FINV) is the least popular one with only 11 bullish hedge fund positions. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SBGI is 30.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately SBGI wasn't nearly as popular as these 5 stocks and hedge funds that were betting on SBGI were disappointed as the stock returned -6.7% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.